KINGSTON, Jamaica – Tax Administration Jamaica (TAJ) has forked out nearly $400 million of taxpayers’ money over the past three years to rent two buildings it is yet to occupy.

One of the buildings that was leased for $700,000 per month in Annotto Bay, belongs to a sitting Member of Parliament in St Mary.

The other building in Greevale, Mandeville in Manchester was leased from a private company for nearly $360 million over the period.

The troubling information is contained in a Special Audit Report from the Auditor General’s Department (AGD) and is one of two reports that were belatedly cleared for tabling in the House of Representatives on Tuesday by House Speaker Juliet Holness. The reports were first sent to the Parliament in January.

The main findings of the audit report are as follows:

● As at August 2023, TAJ expended JA$15,000,000 for the lease of a property in Annotto Bay, St Mary;

● TAJ did not receive written permission from. the Commissioner of Lands prior to entering the lease agreement for the Annotto Bay property and
● TAJ is yet to occupy property leased in Greenvale, Mandeville;

The AGD has recommended that based on the funds already expended, the TAJ “must urgently put in place the necessary arrangements for the timely completion of its renovation projects to reduce the level of nugatory expenditure, especially at the Annotto Bay location given the safety concerns at the current office”.

In the case of the Annotto Bay location, Auditor General Pamela Monroe Ellis said she commissioned the special audit based on allegations that the private company of a Member of Parliament owned a building that was being rented by TAJ although the building was not being used for taxpayer services.

She pointed out that while she found instances where TAJ was not compliant with the Government’s Asset Management Policy, she saw no evidence to substantiate the allegation that the sitting MP who is listed as the director of the private company that owns the Annotto Bay location in question, interfered with the TAJ’s procurement process, or influenced TAJ’s decision to lease the property.

However, she urged the TAJ to actively consider the recommendations contained in the audit report to improve accountability and transparency in its procurement practices related to leasing arrangements.

The audit outlined that the TAJ was seeking a property to relocate its tax office in St Mary and it is alleged that the MP, through his private company, bought a commercial building within his constituency, a few metres across from the existing tax office, which was subsequently rented to TAJ for approximately J$700,000 per month.

It is further alleged that the building is not yet occupied (up to August 2023) by the TAJ, although approximately eight months’ rent has been paid and to date renovation/retrofitting works are yet to commence.

TAJ began leasing the property on January 25, 2022 and as at August 31,2023, had spent a total of J$15 million on lease payments. TAJ has projected that the retrofitting works should cost J$56.2 million. The AGD said that up to the time of this report, there was no evidence that TAJ had relocated its operations to the property. TAJ’s Property Services Unit assessed that the building in question was the only suitable property in the area as it was previously occupied by a bank.

The AGD said TAJ did not receive written permission from the Commissioner of Lands prior to entering the lease agreement, nor did it engage the National Land Agency to conduct a valuation of the said property as stipulated in section 7.5.4 of the GOJ Asset Management Policy.

According to TAJ’s management team, this requirement was not adhered to in the interest of time as another entity was also interested in leasing the space.

Meanwhile, the AGD said the TAJ is yet to occupy the building it leased in Greenvale, Mandeville, despite expending a total of J$356.8 million as at August 31, 2023.

“Despite the completion of the proposal for renovation and furnishing in June 2019, and the first lease payment in September 2020, the necessary retrofitting/renovation works had not yet commenced as of August 2023,” said the audit report.

It said TAJ also occupies two other locations within the Mandeville area costing the government $51.1 million per annum. The report said TAJ indicated that it sought to relocate its operations in Mandeville to the 42,300 square feet location to eliminate the challenges in the management and delivery of taxpayer services occasioned with operating the other two locations.

Combined, the TAJ, up to August 31, 2023, had expended a total of J$371.8 million for the unoccupied Annotto Bay and Mandeville locations. TAJ’s monthly lease payments for the aforementioned properties combined in August 2023, was $11,378,371.

In its management response, TAJ accepted the AGD’s recommendations and has said it will review its asset management policy to incorporate the relevant changes.